Baosteel stated in a notice to Xinhua News Agency that the iron ore price was set after “friendly negotiation,” and showed “both sides’ commitment to safeguarding sound market order and maintaining long-term friendly cooperation.”

Major suppliers are calling the shots in deciding iron ore prices, posing enormous pressure on domestic steel makers. Judging by Japanese experience, the Chinese companies should buy stocks and aim to become one of the major shareholders of suppliers, therefore they will be able to share the profit of rising iron ore prices, said Shan Shanghua, Vice Secretary of China Iron and Steel Association.

CDB Defied Market Turbulence

Amid global financial market turmoil, China Development Bank (CDB) stated it would increase its presence in the British bank Barclays Plc by acquiring more of Barclays shares.

Barclays, Britain’s fourth largest lender, announced on June 25 it would raise approximately 4.5 billion pounds ($9 billion) through the issue of 1.58 billion new ordinary shares.

CDB did not reveal how much more it would spend on Barclays. But a CDB official said the decision was aimed at consolidating the bank’s position as Barclays’ biggest shareholder and showing its confidence in the British bank’s strategy and prospects, according to Xinhua News Agency.

Barclays Chief Executive Officer John Varley said in a press conference he would use half the proceeds to bolster the bank’s capital adequacy, while the rest will be used for other business opportunities, including possible acquisitions, increasing consumer lending in Asia, and investment banking in the United States.

However, the depressing international financial markets had increased uncertainties for this transaction. CDB became a major shareholder of Barclays last year, and is now holding 3.1 percent of Barcalys’ shares. CDB bought Barclays shares at about 7.2 pounds, but the latter’s share prices has dropped half to around 3.3 pounds at present.

Xi Yangjun, financial professor at Shanghai University of Finance and Economics, believed it was a golden opportunity to buy Barclays shares. “The bank’s share price is at a very low level, mainly because of the subprime mortgage crisis. But the bank’s internal management did not show any problem,” said Xi.

Easing Energy Tension

China’s first coalbed methane (CBM) pipeline is expected to function at the end of this year, after which CBM will run from Shanxi Province to the east part of the country.

China National Petroleum Corp. (CNPC) announced the pipeline, 35 km long, would be capable of carrying 3 billion cubic meters of CBM each year.

CBM is a new energy source with no pollution and high in caloric value. It is a form of natural gas extracted from coal beds. In recent decades it has become an important source of energy in the United States, Canada, and other countries.

CNPC stated that natural gas supplies will fall 60 billion cubic meters short of demand in China by 2010. “The project will make use of CBM in a more economic way and supplement sources for the west-east gas pipeline and ease the gas supply strain,” CNPC said in a public statement on its website.

Numbers of the Week

95 billion yuan

The Chinese Central Government decided to spend 95 billion yuan ($13.58 billion) of central budget money to help earthquake-hit areas.

0.5-1.5 yuan

McDonald’s raised prices on some of its products in China including hamburgers, beverages, potato chips, and set courses up by 0.5-1.5 yuan ($0.07-0.2), citing rising raw material costs and human resource costs.